After experiencing three consecutive quarters of stability, the Chinese Consumer Confidence Index (CCI) rose from 106 in the third quarter of 2016 to 108 in the fourth, according to the latest Nielsen Consumer Confidence Index survey.

Throughout 2016, the quarterly consumer confidence index remained stable in the 105-108 range, showing a steady trend as the country’s economic development entered a “new normal,” indicating that China's consumer confidence was positive and optimistic throughout the past year.

“As China's economy enters a new normal, the country’s economic growth has been gradually shifted from investment-driven to consumption-driven. Chinese consumers will play an important role in the country’s economic development as we move forward into this digital era of increasing connectedness," said Vishal Bali, managing director of Nielsen China.

"Though China's economy has stabilized in recent years, the confidence of Chinese consumers remains strong and positive. With incomes on the rise and unemployment remaining low, consumers are seeing a bright future and are willing to spend on premium products and life experiences."

Amid great political and economic change around the world, global consumer confidence moved modestly in 2016, rising three points between the first and fourth quarter to 101. And while quarter-on-quarter swings occurred in most markets, fourth-quarter confidence scores increased from the first quarter of 2016 in 44 of the 63 markets measured in the online survey.

China’s CCI for 2016 has reached 106, a slight decline as is compared with 107 in 2015, yet generally it is still heading towards stable development. China's domestic economy is slowing down its growth speed these years. The growth of GDP in 2016 is 6.7%, lower than 6.9% in 2015, indicating that not only is China’s economy is experiencing a "New Normal", but Chinese consumers are getting accustomed to this new trend. Though interestingly, as China's economic growth decelerated in 2016, the willingness of Chinese consumers to purchase continues to grow. People’s willingness to spend in Q4 reached 53%, topping all that in four years.

"As Chinese economy is heading towards the New Normal, Chinese CCI is going to remain stable in the near future. As people’s living standard keeps improving, Chinese consumers are in pursuit of more premium products," said Vishal Bali.

Positive Employment Prospects Contribute to CCI Rise in Q4

Chinese consumers’ high expectation on employment pulled up consumer confidence in the fourth quarter. Nielsen data showed that consumers’ job prospects jumped from 60 in Q3 to 64 in Q4. Meanwhile, the willingness to spend also rose from 52 to 53. The expectation of personal finance in Q4 remained the same as the third quarter at 62%.

The report shows that expectations on job prospects experienced increase across the country, with nationwide optimism about future employment. This trend is particularly evident in West China, as its data soared from 61 to 67 in the fourth quarter. In terms of city levels, rural residents and people living in fourth-tier cities were most positive about their employment, each up 5 points to 59 and 69 respectively.

“In recent years, the government has introduced investment and preferential policies for western and rural China in order to promote local economic development. As a result, the west region is becoming a new growth engine for the country’s economy, as well as providing job opportunities for local people. All these factors are contributing to the boost in residents’ expectation on employment," said Vishal Bali.

Enjoy a Quality Life —Continuous Consumption Upgrade

The Nielsen report shows that Chinese consumers are increasingly enjoying a more convenient life as the standard of living improves. This demand has led to an increase in online shopping and high growth in convenience store numbers and revenue. Nielsen data shows that fresh products are the fastest growing online shopping category in 2016, which rose 10 percentage points over the previous year, followed by the beverage / packaged food / health products category, which is up 4 percentage points. Daily necessities, service products, clothing, personal care and other categories of online shopping also rose over the previous year.

"Consumers, young consumers in particular, are increasingly looking to small format stores and online platforms for convenient shopping. Meanwhile, those visiting larger or medium format retail stores are more focused on shopping experience and promotions. Compared with physical stores, online platforms are attracting consumers with relatively low prices, convenience of comparison and door-to-door delivery services," said Vishal Bali.

Against the background of consumption upgrade, the need of consumers lied not only in higher quality of product and better shopping experience, but also in more leisure activities. As a result, tourism became a new trend in the past year. Nielsen data showed that 37% of Chinese respondents traveled in 2016, a 3% increase compared to the previous year.

The report also showed that 41% of Chinese respondents had out-of-home entertainment in 2016, while the percentage was only 36% in 2015. Residents in tier-1 cities had more cultural needs. During the past year, 57% of China's tier-1 city residents watched live music shows, a figure even higher than the US average of 51%. In tier-2 cities in China, there were also 40% of residents who watched live music shows last year.

At the meantime, Nielsen found that watching movies is the most-favored entertainment for Chinese people, as 86% of respondents chose watching movies as their favorite leisure activity, followed by listening to music (81%) and watching TV (78%).

Post-1980s consumers have become the backbone of China’s consumption-driven economy

Most of people born in the 1980s are above 30 years old and have become the backbone of social development. A Nielsen study found that as their economic strength continues to grow and they are now the main force in consumption. Nielsen data shows that 210 million consumers in China are post-1980s, accounting for 16% of the country’s total consumers, more than any other age group.

The report shows that families of post-1980s have higher monthly income than that of those born in 1960s, 1970s and 1990s. About 36% of post-80s families have monthly income of over 10,000 yuan, followed by families of post-1970s (32%) and post-1990s (31%). Only 28% of post-60s families’ monthly income surpasses 10,000.

Better economic conditions also make consumers born in the 1980s more optimistic about their financial situation, and therefore they have greater consumption power compared with other age groups. When comparing age groups from post-50s to post-90s, people born in the 1980s stand out, with 59% of them regarding their present financial status as "good", higher than that of post-1960s (57%), post-1970s (54%), post-1950s (52%) and post-1990s (51%). Meanwhile, 65% of the post-1980s are very positive toward their expected financial status in the next 12 months, one percentage point higher than the post-1990s group, and far higher than that of the post-1970s (58%).

Most of the post-1980s have been married and have their own families, thus family spending accounted for the main part of their consumption. Children’s education accounted for 55% of their total spending, much higher than the average percentage of other age groups (40%).

At the same time, vehicle purchases and maintenance take up another large part of the spending of post-1980s consumers, approximately 30%. This is much higher than the average percentage of other age groups (24%). According to the Nielsen report, 13% of the post-1980s have private cars, higher than that of people born in 1970s (7%) and 1990s (9%). More than that, post-1980s are especially passionate about entertainment, with 44% of them saying their family goes out for leisure activities, four percentage points higher than the average level of other age groups.

"With rising financial influence, consumers born in the 1980s are becoming the mainstay of China’s consumption-driven economy. Marketers looking to drive growth for their brands should be focusing in on understanding this key consumer segment,” said Vishal Bali.

“In contrast with post-70s and post-60s consumers, the post-80s consumers are becoming increasingly sophisticated in their shopping behavior and the way in which they interact online. Therefore, brands need to improve both their offline and online marketing strategies if they are to accurately engage target consumers and build brand awareness," concluded Bali.